The dragon Down Under: the regional labour market impact of growth in Chinese imports to Australia

Manufactured imports from China to Australia grew 11-fold between 1991 and 2006. Local differences in industry structure are used to identify the impact of that growth on local labour market outcomes. This growth is estimated to have reduced local manufacturing employment considerably. Local adjustment occurred through labour mobility between regions plus increased rates of unemployment and non-participation. By contrast, import growth from other Asian countries had little impact on Australian manufacturing employment. This is because Chinese imports tended to be in sectors with slower growth in domestic consumption (absorption) and with high labour intensity.